Supreme Court allows appeal, finding special circumstances regarding trustee duties and fiduciary relationships negate security for costs order.

THE SUPREME COURT

[S.C. No: 082 of 2004]

Denham J.

Geoghegan J.

Macken J.

Between/

The West Donegal Land League Limited

Plaintiff/Appellant

and

Udaras na Gaeltachta

and

Joseph Hamilton Boyd

and

Daniel Harley

and

Togail Dhun na nGall Teoranta

and

Aerphort Idirnaisiunta Dhun na nGall Teoranta

Defendants/Respondents

Judgment delivered on the 15th day of May 2006 by Denham J.

1. This appeal raises issues as to the ‘special circumstances’ which may be relevant to a claim for security for costs. It is an appeal

by the West Donegal Land League Limited, the plaintiff/appellant, hereinafter referred to as the plaintiff, from a judgment of the High

Court delivered on the 26th November, 2003, whereby it was ordered, pursuant to s. 390 of the Companies Act, 1963, that the

plaintiff do furnish security for Joseph Hamilton Boyd, the second named defendant/respondent, (hereinafter referred to as the second

named defendant) for the second named defendant’s costs in this action, and that in default thereof further proceedings be stayed

as against the second named defendant.

2. The learned trial judge held, referring to s. 390 of the Companies Act, 1963:

“In my judgment the section is as applicable to a company limited by guarantee as to a company of limited liability by shares.

Charitable status does not exempt a company from all compliance with company law. There is no averment on the part of the

plaintiff that it will be able to pay the costs of the second defendant if he is successful in his defence. The assets of the

plaintiff if put into the hands of its solicitor to prosecute and pursue the case and instruct counsel for the plaintiff, would in

today’s terms, unless such services were freely given or charged at less than normal charges be wholly unlikely to be sufficient

to meet the costs of the plaintiff on the case as disclosed on the papers. I make no assessment as to the likely outcome of the

case.

...

I am satisfied and find as a fact . . . that the second defendant has a prima facia defence to the plaintiff's claim that the

plaintiff will not be able to pay the second defendant’s costs. I am not at all convinced that the plaintiff's inability to discharge

the second defendant’s costs of successfully defending the action flow from any wrong allegedly committed by the party

seeking the security. In my judgment the plaintiff has not established “special circumstances” which would justify the refusal of

the order. In this case there is no averment or assertion that the fund accumulated is designed and intended for no other

purpose than to meet a potential liability to the second defendant or any defendant, rather it is clear that it is a fighting fund

which if exhausted or exceeded in application to the plaintiff's own case will leave a successful defendant with a paper company

with no assets of any kind. There is no evidence that the plaintiff has suffered any impecuniosity as a result of any wrongful

act of the second defendant – it simply does not exist.

While mindful of the remarks of Fitzgibbon J. in Perry -v- Stratham [1928] I.R. 580 that “security is not intended as an

indemnity against all costs which may be incurred or as an encouragement to luxurious litigation”, the context of the present

application cannot be ignored. While the facts in Fallon -v- An Bord Pleanála [1992] 2 I.R. 380 are clearly distinguishable from

those of the instant case, the thirty or so individuals whose interests are broadly similar are entitled to organise themselves

under the aegis of a limited liability company. They are not thereby entitled under such guise entitled to wage litigation

essentially to protect their own private interests and leave the empty shell behind to a successful defendant. The use or abuse

of the devise of a company cannot be ignored by the law (see Lynch J. in Malahide Community Council Limited -v-Fingal County

Council & Ors [1997] 3 I.R. 383 at p.399/400. While making no such finding of abuse as such in this case on this motion, such

may be a matter of inquiry on the hearing of the action.

As to the amount of security - I have no evidence of figures, the evidence of costs drawers for the respective parties could be

put before the appropriate court to determine such sum.

In my judgment this is a matter which would be much more conveniently and much less costly to conduct in the Circuit Court in

Donegal where the majority of the witnesses are resident and where it would appear that the defendants may very well have

their offices or the personnel most likely to be involved in the case.”

3. On behalf of the plaintiff six grounds of appeal were filed, as follows:

(i) The learned trial judge erred in law or on the facts or on the mixed question of law and fact or in the exercise of his

discretion to order security for the second named defendant’s costs.

(ii) Counsel for the plaintiff in the High Court on 28th July, 2003, had stated that there was a two part test to any application

for security for costs; (a) whether the company was solvent, and (b) even if a court was so minded to grant security, whether

or not there existed special circumstances that might preclude same. In his submission on 28th July, 2003, counsel indicated to

the learned trial judge that his submission on that date only dealt [with] the first test, holding that the second was a matter for

a hearing with oral evidence, if necessary, in the then Chancery No. 2 list.

Notwithstanding these arguments the learned trial judge in his judgement of 26th November, 2003, dealt with all issues and thus

deprived the plaintiff of a fair hearing, and the right to adduce additional evidence. Further the learned trial judge failed to make

clear to counsel for the plaintiff during submissions that he wished to have all matters dealt with and/or he did not intend to

have a second hearing on the merits.

(iii) The failure of the learned trial judge to make clear that he wanted all matters dealt with in the submissions heard on 28th

July, 2003, meant that counsel for the plaintiff did not feel it necessary to go into detail on the facts of the case which had

they been put fully before the Court, would have shown those special circumstances that would have justified refusing an order

for security for costs, even if the first test had been met. Further, that decision of the learned trial judge meant that counsel

for the plaintiff did not adduce the credible evidence in possession of the plaintiff that the present litigation arose from the

action of the second named defendant in selling land for which he was a trustee, for his own personal benefit, and that the loss

of the plaintiff was directly due to the actions of the second named defendant, either alone or with others.

(iv) The failure of the learned trial judge to make clear on 28th July, 2003, that all issues were to be addressed and/or his

failure to correct the repeatedly stated view of counsel for the plaintiff that he was only dealing with a preliminary issue

prevented the introduction of credible evidence of special reasons not to grant an order for security for costs on the merits.

(v) That in any event, the learned trial judge erred in law in holding that the company would be unable to pay the costs of the

defendant. At the present time the company is solvent and no evidence was produced before the learned Judge by the

defendant that the company was insolvent or would become so.

(vi) That the learned trial judge as senior counsel signed High Court pleadings on or about 4th July, 1988, in an action Cissie

Houston -v- Udaras na Gaeltachta and others (6395P/1988) which action is closely connected with the claims here (it is stated

that the plaintiff accepts that the matter was not raised before the learned judge since same was only discovered on 5th

February, 2004).

4. At the hearing of this appeal counsel for the plaintiff indicated that the sixth ground of appeal was withdrawn.

5. This case raises several issues for determination, which I shall consider in turn.

5.1 Counsel for the plaintiff submitted that there were two key issues for the High Court, the first being the solvency of the plaintiff

and the second being the ‘special circumstances’. An important submission on behalf of the plaintiff was that he did not have an

opportunity in the High Court to address the second part of the test, the ‘special circumstances’.

This case was heard in the High Court on a Monday motion list. Counsel indicated that it was before the Court for approximately 10

minutes in total and that he had no opportunity to open the issue of ‘special circumstances’, or the documents which, he submitted,

were relevant to this aspect of the case. He also indicated that he might seek to give oral evidence on this issue. While the learned

trial judge reserved judgment and in that reserved judgment referred to some documents, counsel submitted that he had not had the

opportunity to address the Court on the relevant documents and that the learned trial judge did not refer to important documents

relevant to the ‘special circumstances.

I understand that there are motion lists before the High Court on Mondays to which longer motions may be moved. Unfortunately this

motion did not have the benefit of such a list. Practice and procedures, and case management, should not be such so as to

undermine the access to court of any person. This case raises issues not just of a lack of appropriate time but also of the consequent

perception of the justice system, both of which are matters of considerable concern.

It appears to me that the situation which occurred in the High Court is not cured by this Court considering the matter fully, in effect,

de novo. I am satisfied that counsel for the plaintiff has made out a reasonable case that this matter should be remitted to the High

Court to be reheard in one of the lists designated for longer motions where all aspects of the case, including the issue of ‘special

circumstances’, may be opened.

5.2 If, however, the case is not to be remitted to the High Court, the core of the motion is the ‘special circumstances’. Counsel for

the plaintiff submitted that a relevant ‘special circumstance’ was that the second named defendant had effectively admitted the

allegation of the action. On the otherhand, counsel for the second named defendant argued that if this is a ‘special circumstance’ the

court is then being invited to embark on an investigation into the merits of the case.

5.3 It is not the jurisprudence of the law on security for costs that on an application for security for costs there should be an

investigation into the merits of the case. All the circumstances have to be considered, to see if ‘special circumstances’ exist.

5.4. Facts submitted

Land is at issue in this case. The land, it is common case, was held as commonage. However, while counsel on behalf of the plaintiff

maintains that that remains the situation, the second named defendant defends the case on the basis that he is now the beneficial

owner.

5.4.i The plaintiff is a company, and thus it is a separate legal entity from its members, the graziers. Michael Gillespie deposed that he

was solicitor for the plaintiff and he set out facts within his own knowledge on behalf of the plaintiff. He stated that the case was

about the ownership of a large portion of land in or beside and including the airport at Braade and Carrickfin, County Donegal. He

deposed that the land is of immense ecological significance. He accepted that the second named defendant appears to be the lawful

owner on paper, on Folio 33573, since 25th October, 1983, but that both the history of this land and contemporary documents reveal

that he is not the true beneficial owner. The land in dispute was reclaimed from the sea in the early 1900s and was farmed in common

by around 30 local landowners who paid rent to the Marquis of Coyningham. They nominated two persons to collect the rent, William

Alcorn of Carrickfin and Doney Harley of Braade. The Land Commission vested the land in the two rent collectors to save official time,

the Alcorn interest passed to the second named defendant. Mr. Gillespie deposed that the second named defendant held himself out

as a trustee for the said local landowners. The land in question has never been fenced by the second named defendant and has been

treated as common land down to the present time. It is still used by the local community for walking. He maintained that members of

the plaintiff have continued to control grazing lets for cattle and the taking of bent grass, with no objection from the second named

defendant. Moreover, he deposed that the second named defendant has expressly admitted that he is a trustee. On or about 28th

January, 1987, one Cissie Houston made a complaint to the Law Society about the firm of O’Donnell & Sweeney, solicitors, and their

handling of various transactions in regard to folios connected to this land. In his reply of 17th February, 1987, the senior partner,

Michael Fogarty, stated clearly that the land in Folio 33573 was treated as commonage. When a lease had been signed with Udaras

Na Gaeltachta and £25,000.00 handed over it was not paid to the registered owners, namely the said Cissie Houston and the second

named defendant, but was given to a committee representing all the graziers. When capital gains tax was sought from the second

named defendant he was happy to have it waived on the basis that he had no personal interest in the land and had never received

the monies. The letter concluded with a repetition of a statement by the second named defendant where he admitted that he was

never the beneficial owner of the land registered in his name on Folio 33573 and that all the acts carried out by him were as a

trustee. Mr. Fogarty stated that he held the original signed statement. Michael Gillespie deposed that he had asked the second named

defendant on 5th November, 1999, to confirm said statement which he did by acknowledging same as true and by signing his copy.

Mr. Gillespie stated that the second named defendant had freely acknowledged that he had previously in 1987 signed the said

statement as true and that he appeared to fully understand the said statement when he signed it again in his presence on 5th

November, 1999. The second named defendant also signed an instruction to his own solicitors, MacBride & Co., on 5th November,

1999, to provide the deponent with a copy of the documentation regarding his purported sale of part of the said land to the fourth

named defendant. The documentation sent to the deponent, on 12th November, 1999, and signed by the second named defendant,

contained special conditions acknowledging that there may be grazing or other rights. However, on or about 7th April, 2000, through

his solicitor, the second named defendant insisted that he was the lawful owner. Neither he nor his solicitor appear to have written to

Mr. Fogarty before or since that letter. Accordingly, it was submitted that it would appear that the central factual basis for the

second named defendant’s claim as set out in paragraph 5 of his affidavit is unfounded and that the community has formed itself into

a company to assert traditional grazing rights, not least because of the second named defendant’s conduct. Having held himself out

as a trustee down the years, and having given away his half-share of £25,000.00 in 1984, he now asserts that he is the owner. It

was submitted that his conduct factually precludes a successful application for costs and that the claim against him arises from his

own misconduct. Mr. Gillespie deposed that this land has always been held by at least 30 persons and not by 2 individuals. He

submitted that there was nothing sinister in forming a company, which has charitable status. He deposed:

“It is an expression of popular and practical litigation and will protect the rights now vested in this company against abuse by

individuals such as the second Defendant and will ensure the future protection of the lands against destructive and insensitive

development.”

5.4.ii Eamonn MacBride, solicitor on behalf of the second named defendant, has also deposed as to facts. He referred to the

statement of claim in which the plaintiff is claiming a variety of reliefs relating to the lands situate at Braade and Carrickfin in County

Donegal. Reference was made to the statement that the plaintiff company was formed by graziers and local farmers to protect their

interests in these lands. In his affidavit Mr. MacBride deposed that the plaintiff has no assets and does not trade. I shall return to this

issue later. Mr. MacBride deposed that the plaintiff has numerous members and that grazing rights are being claimed. Mr. MacBride

deposed that:

“a case of this nature would take at least two weeks in the High Court. This will place an enormous strain on the second named

defendant who is a farmer. The Second Named Defendant is the registered owner of lands comprised in folio 33573 the register

of Freeholders for County Donegal. The plaintiff company is in effect trying to take away this Defendants interest in these

lands.”

The folio is exhibited. As to the formation of the plaintiff company it was deposed:

“There would not appear to be any reason why a limited company would have to be formed to protect the property rights of the

members therein. If the members of this company had property rights these can be asserted by the individuals themselves.”

It is stated that if this is the case the second named defendant could have no recourse in relation to costs should he succeed in the

action. It was deposed that the second named defendant is going to be penalised even if he should succeed in the action as, it was

deposed, the plaintiff had no assets.

5.4.iii Thus, it is the second named defendant’s case that he is the full owner, the registered owner, of the lands as exhibited. He

refutes his earlier statement that he was a trustee. He submits that previous denials as to ownership by him were made for another

purpose, and may not be taken to mean that he is not the owner. Yet those statements were to achieve a benefit - to avoid paying

tax. Without deciding on the merits of the case, or the credibility of the evidence, it appears to me that the second named defendant

cannot have his cake and eat it. If he made statements to achieve tax benefits on the basis that he did not own the land, then those

statements may not be ignored in relation to an application for security for costs in proceedings relating to the land.

6. Law

This application for security for costs is based on s. 390 of the Companies Act, 1963. Section 390 of the Companies Act, 1963

provides:

“Where a limited company is plaintiff in any action or other legal proceeding, any judge having jurisdiction in the matter, may, if

it appears credible testimony that there is a reason to believe that the company will be unable to pay the costs of the

defendant if successful in his defence, require sufficient security to be given for those costs and may stay all proceedings until

such security if given.”

Thus a discretion is given to the court as to whether to require security for costs. The first step is to determine whether such an

order should be made, and the second step relates to the amount of security. The first step is in issue on this appeal.

There is a difference between the exercise of the discretion under s. 390 of the Companies Act, 1963 and under the Rules of the

Superior Courts. In Thalle v. Soares [1957] I.R. 182, delivering the unanimous judgment of this Court, Kingsmill Moore J. contrasted

the principles to be applied in the exercise of the discretion whether or not to grant security for costs pursuant to s. 278 of the

Companies Act, 1908 (now s. 390 of the Companies Act, 1963) and an application under the Supreme Court Rules. Kingsmill More

stated, at p. 192:-

"The deciding factor, to my mind, is the wording of the section when contrasted with the rule. The statute lays down

reasonably precise instructions as to the measure of security while the rule makers and the judges seem studiously to have

avoided any such approach to definiteness, leaving each case to be decided by an uncontrolled discretion. Those judges who

have considered the matter appear to have realised that different considerations applied to cases under the statute from the

considerations relevant to cases under the inherent jurisdiction"

In other words, the precision referred to is as to the measure of the security.

Kingsmill Moore J. referred to the fact that the rules do not indicate a measure of the costs. He stated at p. 193:

"Security for costs must be so fixed as to advance the ends of justice and not to hinder them. If the amount is too small a

plaintiff with a speculative or even dishonest case may be able to force a defendant into an unfavourable settlement by the

threat of expensive litigation whose costs may be irrecoverable; if too large a defendant may be able to defeat an honest and

substantial claim because the plaintiff cannot find the necessary security. Somewhere between Scylla and Charybdis, a way has

to be found but there can be no Admiralty chart, no succinct sailing directions."

This analysis was in contrast to s.390 which provides for ‘sufficient security’ for the costs of the proceedings. Murray J. (as he then

was) pointed out in Framus Ltd. & Ors. v. CRH Plc. & Ors. [2004] IESC 25 - now reported at [2004] 2 I.R. 20 at p.56:

“The current statutory jurisdiction of the court is expressly granted by s.390 of the Companies Act 1963. Pursuant to that

section the court may require security for costs for the full amount of the estimated costs of the proceedings although it has a

residual discretion as to the order which it should make. (S.E.E. Co. –v- Public Lighting Service Ltd and Anor [1987] I.L.R.M. 255

and Lismore Holmes Ltd (in receivership) –v- Bank of Ireland Finance Ltd [1992] 2.I.R. 57)”.

Special circumstances

In S.E.E. Co. v. Public Lighting Services [1987] I.L.R.M. 255 this Court refused to make an order for security for costs. It held that

s. 390 of the Companies Act, 1963 is not mandatory, that the court has a discretion which may be exercised in special

circumstances. In that case it was stated that, among the circumstances to be considered in the exercise of the court’s discretion,

delay of an applicant was of particular significance. This, coupled with the fact that the inability of the plaintiff to pay costs stemmed

from the subject matter of the action, was sufficient to justify the court refusing to order security for the costs of the appeal in that

case. McCarthy J. (with whom Finlay C.J. and Hederman J. agreed) referred to English case law but held:

“I would prefer to point to the discretionary nature of the court’s jurisdiction, a discretion which the court will exercise having

regard to all the circumstances of the case to that purpose; see the cases referred to in Wylie’s Judicature Acts at 46 and 798

- 800 as well as those referred to in The Supreme Court Practice 1985, 23/1 - 3/14 and 59/10/16”.

In considering the circumstances McCarthy J. held, at p. 258:

“Without attempting to make an exhaustive list, it would seem relevant to consider such matters as:

(i) Has a prima facie case been made to the effect that the inability identified by the section flows from the wrong

allegedly committed by the party seeking security?

(ii) Is there an arguable case stated in the motion of appeal?

(iii) Has there been undue delay by the moving party?”

McCarthy J. pointed out that countervailing circumstances would include the very fact that the insolvent company has lost the case

in the High Court and is now an plaintiff.

The analysis of ‘special circumstances’ is not closed. No exhaustive list or definition has been made. In considering the concept of

‘special circumstances’ it should be remembered that the essence of the order for security for costs (or not) is ‘to advance the ends

of justice and not to hinder them’ per Kingsmill Moore J. above. It is for a court on such an application to consider, and to balance,

the interests of the plaintiff company and those of the second named defendant in a fair and proportionate manner.

In the application, inter alia, there is an onus on the second named defendant to establish by credible evidence an inability on behalf

of the plaintiff to discharge the second named defendant’s costs. There is also an onus on the second named defendant to satisfy

the court that he has a prima facie defence. There was evidence before the High Court on both these issues, on which the High

Court found in favour of the second named defendant.

However, that is not necessarily the end of the matter. The order to require security for costs is discretionary. Even if the second

named defendant discharges all the proofs required by law there remains a discretion in the court to decline to make an order for

security for costs if the plaintiff satisfies the court that ‘special circumstances’ exist. It is for the court to consider the ‘special

circumstances’ and exercise a genuine discretion on the facts of the case. In S.E.E. Co. Ltd v. Public Lighting Services Ltd. [1987]

I.L.R.M. 255 at 258 McCarthy J. said that the ‘discretionary nature of the order is emphasised when read in the light of the

constitutional right of access to the courts’. In Irish Press Plc v. EM Warburg Pincus & Co. International Ltd. [1997] 2 I.L.R.M. 263

McGuinness J. stated at p. 274:

“While I accept, as was submitted by Counsel for the defendants in this case, that the constitutional right of access to the

courts is primarily available to natural persons and that the courts must be careful not to render s. 390 nugatory, it seems to

me that in his judgment the learned McCarthy J is expressing the general tenor of judgments in this Court and in the Supreme

Court in regard to security for costs under s. 390 of the Companies Act, 1963.”

While it may be that this is an analysis of the height of the discretion, it does illustrate that the court is exercising a genuine

discretion. Thus the plaintiff may prove ‘special circumstances’, and if this is done then, even thought the second named defendant

may be prima facie entitled to an order for security for costs, in view of the ‘special circumstances’ the order may not be made.

In this case the second named defendant filed an affidavit and documents making the case that the plaintiff will probably not be able

to pay the costs of this action in the High Court and that he has a prima facia defence, which was accepted by the learned High

Court judge.

The onus then shifted to the plaintiff to satisfy the Court that ‘special circumstances’ existed. It was at this stage that the first issue

on this appeal arose - that counsel for the plaintiff made the argument that he was not given the opportunity to make the case as to

‘special circumstances’ in the High Court. Leaving that aside for the purpose of this aspect of the judgment, I have considered the

documents before the learned High Court judge. As the case was decided on documents I am in as good a position as the High Court

to make determinations of fact. I have thus considered the documents to determine if there are ‘special circumstances’.

The Law of Private Companies, Courtney, 2nd Edition, p. 281 paragraph 6.042, notes that reported judgments have held the following

matters to be ‘special circumstances’, i.e.

(i) Lack of bona fides by the applicant,

(ii) The company’s insolvency having been caused by the applicant,

(iii) The company seeking to vindicate the public interest,

(iv) The existence of a natural co-plaintiff,

(v) The applicant’s delay in applying for an order for security for costs.

These ‘special circumstances’ have been recognised even though an applicant has met the proofs required under s. 390 of the

Companies Act, 1963. In those circumstances the Court has exercised its discretion and has not made an order requiring security for

costs.

8. Decision

The issue before the Court at this time is the question of security for costs. This decision relates solely to that issue. The merits of

the case are not before the court and I express no view on them.

First of all I will deal with a few specific matters which were not the primary issues. No issue was raised on this appeal as to the

application of s. 390 of the Companies Act, 1963 to the plaintiff’s type of company, i.e. a guarantee company without share capital.

Thus I have treated the plaintiff as a company to which s. 390 applies.

Counsel for the plaintiff did not argue that the plaintiff could not access the courts if security for costs were awarded. Nor were there

any broad submissions as to the use of a company in litigation. There was no indication of any intent to bring litigation and leave an

empty shell. There was no evidence of use and abuse of a company. As to the issue of ability to pay costs, the plaintiff has funds,

and, while they are not very considerable, it is not insolvent.

Finally, on these preliminary points, counsel informed the Court that this matter may not proceed in the Circuit Court because of the

valuation of the lands.

My decision is in two parts.

8.1 In all the circumstances of the case I am satisfied that the plaintiff has made out a case that this motion should be reheard by

the High Court, where the issues may be raised fully, including the ‘special circumstances’. While I make no decision as to the use or

not of oral evidence, it appears to me that there are grounds to remit the matter to the High Court for a rehearing of the application

for security for costs. Such a decision is unusual, but that does not preclude it. I would suggest that it be placed in a list which hears

‘long’ motions.

8.2 Should this matter not be remitted to the High Court, I address the issues. I am satisfied that the learned High Court judge erred

in law in holding that the plaintiff had not established the existence of ‘special circumstances’ which would justify the refusal of the

order. I am satisfied that ‘special circumstances’ exist, and I would not order security for costs to be given by the plaintiff to the

second named defendant.

There is no exhaustive list of the ‘special circumstances’ applicable. The court has a discretion in all the circumstances of each case.

Thus it is necessary to consider the circumstances of this case to determine if there are 'special circumstances'.

I am satisfied that the ‘special circumstances’ of this case include the following factors:-

(i) A group of graziers

The individuals involved in the plaintiff company have worked together previously as a group of graziers of commonage with two

trustees, one being the second named defendant. The group has now formed themselves into a company because, to a significant

degree, of the conduct of the second named defendant.

(ii) Fiduciary nature of trustee

It is common case that the lands in issue were held originally in commonage, the plaintiff maintains this is still the case while the

second named defendant submits he is now the owner. It is common case that the second named defendant was a trustee in relation

to the said lands, the plaintiff maintains that is still so, the second named defendant maintains he is now the owner. Thus this case

raises the factor of the fiduciary nature of a trustee. The duties of trustees are well recognised in law and are a significant

responsibility.

(iii) Bona fides of second named defendant

The fact that the second named defendant did, at a previous time, claim a benefit (to avoid paying tax) on the basis that he was

acting as a trustee, raises issues of his bona fides. Thus, the bona fides of the second named defendant is a further important factor

in the assessment of the special circumstances.

(iv) Actions of second named defendant

The fact that the second named defendant expressly admits that he has acted as trustee in the past in relation to the lands is (as I

have pointed out previously) relevant to the special circumstances, raising as it does, not only fiduciary duties and the second named

defendant’s bona fides, but also his actions. I am satisfied that a prima facia case has been made out that the situation (and

consequence to the members of the plaintiff) flows from the actions allegedly committed by the second named defendant.

(v) Justice of the case

In these special circumstances it is appropriate to consider the justice of the case and the court’s duty to advance the ends of

justice and not hinder them. I am satisfied that the justice of the case requires that no order as to security for costs be made.

These factors are considered without determining the merits of the case, or the beneficial ownership of the lands. Applying these

factors I am satisfied that the plaintiff has raised ‘special circumstances’ so as to defeat a claim for security for costs.

9. Conclusion

Accordingly, for the reasons given, I would allow the appeal.